Short answer: No.
In many states, the defamatory statements your firm puts on your U5 may be defamatory per se, and you may have a better shot at getting damages in FINRA arbitration when you seek expungement. (See my previous blog.) But, you must bring a claim within a year of the date your U5 is filed, or the statute of limitations kicks in and you lose that opportunity.
The longer you wait, your former employer will also argue that you sat on your rights, or that their entry on your U5 must not have been all that harmful to your reputation and your career for you to have waited so long. Though you generally have up to 6 years to file if you’re just seeking expungement of information that is false and defamatory in a more general sense, waiting a year or more to file in any case just doesn’t look good to an arbitration panel. Diligence pays. So does being decisive.
Often, brokers tell me they still got a good job after their U5 was dinged, and they figured they would be okay. The hiring manager with their next firm might have known them personally and liked them, or simply overlooked the bad information. They were doing fine for a while, but when they decided to change firms again, they weren’t so lucky this time. The new firm turned down their application automatically after seeing their U5. Even the slightest blemish means instant rejection. “D’OH!”
“D’OH!” is right. Now what? Now, you must seek expungement, or you likely won’t get another job in this business. Most FINRA member firms automatically reject job candidates with any schmutz on their U5 as a means of lessening risk to their business. They take what was written on your U5 at face value and won’t take a chance on you. Why should they? There are plenty of people who want your job. What seemed like no big deal a few years ago is now a career-killer.
